Due to the constraints caused by the pandemic, many countries have faced major changes that have affected their economic situation. Austria is no exception. The consequences of these changes have had an impact on many economic and socially important areas, including the Austrian real estate market. However, thanks to many measures taken by the government, the Austrian real estate market continued to perform well in 2020 with rising prices and demand. What can we expect from 2021? Let’s take a look at the article below.
What happened to Austria’s property market in 2020?
The year began with a nationwide lockdown and without the usual influx of tourists who come from all over the world to visit the ski resorts of Austria. Nevertheless, the Housing Price Index rose in the third quarter of last year and reached its record high of 139.23 points. Overall, the first three quarters of 2020 saw a steady 5% increase in real estate prices. This result reflects the high performance, as well as the pace of recovery of the real estate market in Austria. According to Housebuyers4u real estate specialist Paul Gibbons, such figures put Austria on par with some of the best-performing real estate markets in the EU, such as Germany, Luxembourg, Sweden, Portugal and Malta, where price growth was above average.
Gardens, terraces, and chalets in 2020
In 2020 properties with terraces and gardens were particularly popular. According to Peter Marshall, CEO of Marschall Real Estate, this is due to the fact that after lockdown, many people realized that it is not comfortable to stay at home for weeks without simply having access to an outside area. He also noted that people are more often considering buying residential real estate, as it is a safer investment that will take care of their future.
For the same reason, according to M.D. Baird, a real estate consultant with Lindfors, the level of ski real estate transactions in the Austrian Alps has remained stable throughout the pandemic, with properties such as chalets and lodges being amongst the most popular with buyers.
Property market trends in Austria
A key trend in 2020 was that, for the first time, residential property investment surpassed investment in the commercial office building market. This is due to the fact that many people have moved to remote working and realized the importance of having their own personal workspace at home.
Overall, according to a report by the Bank of Austria, residential real estate construction in the state was one of the fastest-growing sectors in Europe in 2020. Across Austria, there was a high level of demand for luxury real estate, as buyers were particularly interested in buying property near the Alps and lake regions. For example, Kitzbühel has become a hot spot for German buyers as it is located close to Munich.
At the same time, there has been an increased interest in investment properties for rent. More and more people prefer to buy property in the vicinity of Vienna, since there was no need to travel to the office during the pandemic. According to research by the Austrian property platform ImmoScout24, there was a significant increase in the demand and cost of housing throughout Austria in 2020.
Over the past year, the cost of residential property across the country increased by an average of 11.6%, and demand grew by 49%. At the same time, the demand for the purchase of apartments increased by 7.4% and rents rose by 5%.
According to observations, the highest demand was for chalets and private homes in the suburbs of Vienna and Graz. As for other regions, the leader was Carinthia, where the demand for private homes increased by around 76%. Lower Austria (+63%), Styria (+59%) and Burgenland (+55%) were close behind.
What can we expect from Austria’s property market in 2021?
The Austrian real estate industry has proved resilient to crises and one of the stabilizing factors of the Austrian economy. Q1 2021 has started off quite promising. The big picture shows us that the real estate markets in Austria and the EU have maintained their momentum and according to forecasts 2020, real estate prices continue to rise this year. This is primarily due to the continued high demand for residential real estate in Austria. These trends are expected to continue in the second half of 2021, where demand will be driven by the following factors:
- The growth of the tourism industry.
- The strength of the sterling and other currencies against the Euro.
- A higher definition of asset value by income, which is attracting a growing percentage of international investors.
- A well-developed banking sector, as well as low mortgage rates.
However, the crisis is not over yet, and neither is the recovery of the Austrian economy as a whole. Nevertheless, the future seems bright for the Austrian property market, given that more than 40,000 additional residential units are currently in the approval process, allowing construction companies to operate until mid-2022. With that being said, and taking into account the broad investor base and high overall demand, which is likely to lead to further increases in purchase prices, we may confidently say that the Austrian property market will continue to develop well in the second half of 2021.
Therefore, buying property in Vienna, Austria will be a reliable source of passive income in the long term. Find a team of brokers specializing in the Austrian real estate market that have been working with clients for a number of years on acquiring both budget accommodation options and luxury apartments in Vienna’s 1st district, which is recognized as the most expensive in the whole country.
